Capitalist Review

Financial Products Reviewed

How to Use a Secured Credit Card to Rebuild Credit

May 9, 2016 by CapitalistReview Leave a Comment

How to Use a Secured Credit Card to Rebuild Credit

No one’s financial life is perfect. Even Donald Trump declared bankruptcy and Warren Buffett has made investing goofs, so there’s no shame in having less than perfect credit. There’s also no reason to let your bad credit last for long when there’s an easy and virtually free way to rebuild your credit with little hassle and just a little foresight.

So, how do you do it? Easy—secured credit cards.

Secured Credit Cards Explained

Usually, credit cards are given to customers who are given a fixed limit that they can then charge on the card, and either pay off the balance within a month or over time with fixed payments and interest charges on top. These are known as “unsecured” lines of credit, because there is no security, or collateral, that the bank has in case you don’t pay your credit card. If you don’t you run the risk of a lawsuit against you (classactionwallet.com, wage garnishment, and a ruined credit score. In this way credit cards are different from mortgages (where the house is the collateral) or a car loan (where the car is the collateral).

Secured credit cards are different. Instead of giving you a credit card based on your creditworthiness, which is usually calculated by looking at your credit score, banks will issue a secured credit card after you deposit a certain amount of money in a restricted account.

For example,say you want a secured credit card with a $1,000 limit. For a 100% secured credit card, you’ll need to deposit $1,000 in an account with the card issuer. This ensures that the bank has a guarantee against defaults—if you don’t pay your credit card debt, the bank just keeps the money in that account until you do. Of course, if you pay the credit card you can get your money back if you request it—but the bank may then cancel your secured credit card.

This makes secured credit cards virtually risk free for banks, but what’s in it for you?

Benefits of Secured Credit Cards

People who have limited or bad credit will often get secured credit cards as a way of building up their credit scores. Since issuers of secured credit cards report the activity of cardholders to the major credit bureaus, a secured credit card is a way for you to build up a good credit history that, over time, will improve your credit.

This positive impact on a credit history is the main reason why most people bother with secured credit cards.

There are other benefits, too. Some secured credit cards offer rewards like points or airline miles, much like their unsecured cousins.

Also, it has become more common for card issuers to offer partly-secured credit cards to cardmembers who stay in good standing with a secured card for a while. For instance, if you have that $1,000 secured credit card for a couple months, you can call the bank and ask them to free up some of the money securing the card. If they say yes, they will release some portion—perhaps $200 of the initial $1,000 deposit—and keep your credit limit at $1,000. Over time, a secure credit card can turn into an unsecured card as the card issuer builds a relationship with the bank. Many card issuers will do this.

Dangers and Risks with Secured Credit Cards

Not all secured credit cards are a good thing, though. Some banks and card issuers frankly prey on people who don’t know any better. With secured cards, they do this by charging enormous fees for opening and maintaining the card.

Avoid this risk. Many card issuers will give secured credit cards with no fees, so check to make sure if there is any charge up front or during the duration of the account. If so, look elsewhere.

Where to Get a Secured Credit Card

Some of the better credit card offers for people with bad credit include Wells Fargo Secured Visa Card and the Capital One Secured MasterCard.
Contents hide
1 Share this:
2 Related

Share this:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)

Related

Is the AMEX Blue Cash Preferred Card Worth It?
Citi Double Cash vs. Chase Sapphire Preferred

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Popular Posts

  • Jet Blue Mastercard Activate and Review (Barclaycardus Activate Online)
    Jet Blue Mastercard Activate and Review (Barclaycardus Activate Online)
  • AmericanExpress.com Confirm Card (2022 AMEX Card Review)
    AmericanExpress.com Confirm Card (2022 AMEX Card Review)
  • www.homedepot.com/applynow With Reference Number (2022)
    www.homedepot.com/applynow With Reference Number (2022)
  • Best Buy Account Credit Card Login, Activation, & Review
    Best Buy Account Credit Card Login, Activation, & Review
  • GetMyOffer.CapitalOne.com - Card Application for 2022
    GetMyOffer.CapitalOne.com - Card Application for 2022
  • SunTrust.com Activate MyCard: FAQ, Reviews, Customer Service
    SunTrust.com Activate MyCard: FAQ, Reviews, Customer Service
  • My Instant Offer Code (Apply Lending Club Personal Loan)
    My Instant Offer Code (Apply Lending Club Personal Loan)
  • www.mercurycards.com/activate - Login to Activate Your Mercury Mastercard
    www.mercurycards.com/activate - Login to Activate Your Mercury Mastercard
  • www.WellsFargo.com/ActivateCard - How Do You Activate Wells Fargo Credit Card
    www.WellsFargo.com/ActivateCard - How Do You Activate Wells Fargo Credit Card
  • Credit One Increase Credit Limit Request (How Often Does Credit One Give Increases)
    Credit One Increase Credit Limit Request (How Often Does Credit One Give Increases)




Pages

  • About Capitalist Review
  • Affiliate Policy
  • Capitalist Review
  • CapitalistReview Merch
  • CapitalistReview Privacy Policy
  • CapitalistReview Terms of Use
  • CapitalistReview.com
  • Contact
  • Sponsored, Guest Post, and Advertising

Categories

  • Credit Cards
  • Investing
  • Banking
  • Loans
  • Mortgage
  • Capital One Credit Card
  • SoFi Student Loans

Recent Posts

  • GetMyOffer.CapitalOne.com – Card Application for 2022
  • OpenSkyCC.com/Activate: MyAccount Online Account Activation
  • Exxon Mobil Credit Card Login, Application, & Review
  • Can You Use a Walmart Credit Card at Sam’s Club? (FAQ)
  • Chase Southwest Credit Card Application Status (Chase 2022)

Navigation

Capitalist Review Sitemap

Contact Us

Popular

Jetbluemastercard.com/Activate

mercurycards.com/activate

www.barclaysus.com/activate

Recent Posts

  • GetMyOffer.CapitalOne.com – Card Application for 2022
  • OpenSkyCC.com/Activate: MyAccount Online Account Activation
  • Exxon Mobil Credit Card Login, Application, & Review
  • Can You Use a Walmart Credit Card at Sam’s Club? (FAQ)
  • Chase Southwest Credit Card Application Status (Chase 2022)

RSS Capitalist Review

  • GetMyOffer.CapitalOne.com – Card Application for 2022 May 24, 2022
    Get My Offer From Capital One (Quick Summary) A credit card offer from Capital One Almost always arrives by US Mail in the form of a promotional application Intended for consumers with a good to great credit score If you receive this offer you should be happy as you have a great credit score The […]
    CapitalistReview
  • OpenSkyCC.com/Activate: MyAccount Online Account Activation May 22, 2022
    Activate an OpenSky credit card online Simply rev up the old PC and head on over to www.openskycc.com/activate and follow the on-screen instructions. Activation will take about 5 minutes to complete. Please note in order to obtain the OpenSky credit card you must be 18 years of age or older and a legal resident of […]
    CapitalistReview
  • Exxon Mobil Credit Card Login, Application, & Review May 22, 2022
    Exxon Mobil Credit Card Login If you are an Exxon Mobil credit card customer and are looking to take your credit card online please visit citiretailservices.citibankonline.com and follow the on-screen prompts. You must provide an email address, Alternative site logins include exxonmobilcard.com login and https://citiretailservices.citibankonline.com. Please note you must be 18 years of age or […]
    CapitalistReview
  • Can You Use a Walmart Credit Card at Sam’s Club? (FAQ) May 22, 2022
    Can you use a Walmart credit card at Sam’s club? Walmart issues two credit cards: Walmart MasterCard and the Walmart Rewards Card. You must be 18 years of age or older and a legal resident of the United States. Both Walmart credit cards can be used at Sam’s Club. Visit walmart.capitalone.com to learn more about […]
    CapitalistReview
  • Chase Southwest Credit Card Application Status (Chase 2022) May 22, 2022
    Credit Card Application Status Chase The best way to check the status of a Chase Southwest Credit Card Application Status is by calling 1-(888) 338-2586 and press 0 repeatedly.   Check Your Credit Card Application Chase Online You can visit the Chase Southwest credit card homepage to learn more about the application process, how to […]
    CapitalistReview

You can trust the integrity of our balanced, independent financial advice provided by Capitaliat Review. CR may, however, receive compensation from the issuers of some products mentioned in these articles. Opinions, reviews, analysis, advice, and thoughts are the author’s alone and his/her alone only. This content has not been provided by, reviewed, approved or endorsed by any advertiser, unless otherwise noted.

pages

  • About Capitalist Review
  • Affiliate Policy
  • Best Credit Cards of 2016
  • Capitalist Review
  • CapitalistReview Merch
  • CapitalistReview Privacy Policy
  • CapitalistReview Terms of Use
  • CapitalistReview.com
  • Contact
  • IndigoCard.com Apply – Indigo Platinum MasterCard Review
  • Sofi.com/Refinance1: Pre-Selected Refinance Promotional Offer Worth It?
  • Sponsored, Guest Post, and Advertising
  • Student.DRBank.com/BigSavings – Refinance Student Loan with DRB?
  • www.Betterment.com/Start – 5 Reasons to Invest with Betterment
  • www.cashnetusa.com/approved – Prequalified Loan Offer
  • www.SaveWithProsper.com – Prosper Loan Review for Borrowers
  • www.sofi.com reviews – SoFi Review and Sign Up Bonus
  • www.trysofi.com – Student Loan Refinancing From SoFi Worth It?
  • www.upstart.com/myoffer – Upstart Loan Application
  • Best Credit Cards
  • Best Credit Cards For Foodies
  • Coronavirus Home Refi?

© 2016–2022 Capitalist Review

 

Loading Comments...